THE PRESIDENT: Thanks for the warm New Jersey welcome. Thanks for
giving me the chance to come by and share some thoughts with you about
the challenges that this country faces.

First, I tell you it was good to be with my dad over Father's Day.
I hope you all had a good Father's Day, as well. (Applause.) Spent a
lot of time fishing together and caught a few fish. (Laughter.) But
thanks for letting me come by.

I just came from Orange, New Jersey. (Applause.) And went by the
Andrea Foods pasta factory. (Applause.) That's you. The Savignanos
and the Wilkinsons were there, Rose Marie and Michael. They're the
sons and daughters of Andrea and Doro, who started the business. It's
so refreshing to see the American Dream alive and well, just like it is
at Andrea Foods.

I was struck by the diversity of Orange, New Jersey. I saw a lot
of different nationalities as I drove through. It reminded me of a
couple of things about our country -- one, that we are the land of
opportunity and the land of hope and we will keep it that way.
(Applause.) Part of being a land of opportunity means that we must
continue to foster what I call the ownership society, to encourage
value and honor, owning -- people owning their own business or owning
their own home, maybe some day owning their own pension plan in the
security -- Social Security system, having the right to make choices in
the health care sector. The things that make America strong and unique
is not only are we a hopeful land and a diverse land, but we're a land
that honors ownership.

Today I want to talk about the importance of small businesses. I
want to herald the entrepreneurs. I want to say thanks to those who
have taken risks. And I want to remind our fellow citizens that in
order for our economy to recover we must remember the strength and the
importance of the small business owner in America. (Applause.)

So I want to thank all the small business owners who are here
today. Thank you for taking risk, thank you for employing a lot of our
fellow Americans. I want to thank the associations who helped put this
event together. I want to thank Hector Barreto, who is the
Administrator of the Small Business Administration. I want to thank
him for his kind introduction. I want to thank him for his work in
helping to create an environment in which people from all walks of life
are willing to risk capital to own their own business.

I want to thank the mayors who are joining us today. I want to
thank the folks that I had a chance to visit with at Andrea Foods. I
visited with entrepreneurs, visited with taxpayers; I mentioned Michael
and Rose Marie. I also talked to John Cicero, and the Harveys -- Paul
and Lisa. These are people who will benefit from the tax relief plan
because they're married, because they pay taxes -- (laughter) -- and
because they have children. (Applause.)

And I met the Memmelaars -- father and son -- of Royal Master
Grinder, a small business company right here in this part of the
world. I met Pat Mulhern, of Mulhern Bearing* (Belting) Company. We
sat around the table and I listened to the concerns of both taxpayer
employee, as well as small business owner. And the concerns are great,
but the concerns can be solved.

Probably the greatest concern about making sure that -- that our
country is confident and optimistic is to make sure the country is
secure. People want to have a secure environment in which to risk
capital. And, therefore, our biggest challenge, or one of the biggest
challenges is to make sure that we continue to fight and win the war on
terror. (Applause.)

In Washington, D.C., and at the state level and at the local level
we all have what I call a charge to keep, which is to do everything we
can to protect the American homeland. And that only -- not only means
making sure that we cooperate better at the federal, state and local
level, and do a better job with our borders and our ports to
communicate better, but it also means that we've got to stay on the
offensive. The best way to protect the homeland is to hunt the killers
down, one at a time, and bring them to justice, which is what America
will do. (Applause.)

On September the 11th, our country was shocked -- this part of the
world was particularly shocked -- at the violence, the sudden violence
done. We were shocked into recognizing that oceans can no longer
protect us from harm, and therefore we have the serious charge to
keep.

And we acted, because this nation will not be intimidated. This
nation will not be blackmailed by terror. This nation will do what it
takes to defend something we hold dear to our hearts, and that is our
freedom. And we acted. (Applause.) We acted on a doctrine that says,
we will bring you to justice because of what you did to the American
citizens. And by the way, if you harbor a killer -- if you feed a
killer, if you hide a killer, you're just as guilty as the killer. We
acted and the Taliban no longer is in power in Afghanistan, which is
not only good for the security of the free world, it is incredibly good
for the people who suffered in Afghanistan under barbaric rule.
(Applause.)

This nation acted to a threat from the dictator of Iraq. Now,
there are some who would like to rewrite history -- revisionist
historians is what I like to call them. Saddam Hussein was a threat to
America and the free world in '91, in '98, in 2003. He continually
ignored the demands of the free world, so the United States and friends
and allies acted. And one thing is for certain -- (applause) -- and
this is for certain: Saddam Hussein is no longer a threat to the
United States and our friends and allies. (Applause.)

We've got a lot of brave troops still on the move, still looking
for terrorists. We're cooperating with our friends and allies, we're
sharing intelligence, we're running down their money trails. But one
thing is certain for the American people to know, that this government
will use whatever technologies and skill is necessary to secure America
by hunting down those who would harm us, one person at a time. It is a
charge we have been given and it is a charge we will keep. (Applause.)

We also had to deal with an economy which was not as strong that we
wanted it to be. My attitude is, if somebody is looking for work and
they can't find a job, we got an issue. And therefore, we acted. I
went to the United States Congress when I first got elected and said,
this nation is -- looks like it's in recession. We need to let people
have more of their own money in order to stall off the recession.

You see, when the economy is grinding down, when it's not as strong
as it should be, when demand is lax, the best way to deal with an
economic slow-down, is to let people have more of their own money --
(applause) -- is to let people -- let people spend their own money,
increase demand for goods and services. Which is exactly what we did.
(Applause.) And we had one of the shallowest recessions in our
nation's history as a result of the tax relief plan.

But then the terrorists hit us. September the 11th was a shock not
only to our national conscious, it hurt our economy. And we began to
get our bearings and get our feet on the ground, and then another shock
happened to America: we discovered that some of our corporate citizens
forgot what it meant to be a responsible leader. Some of our corporate
leaders didn't tell the truth, tried to fudge the facts, weren't honest
with the shareholders and their employees. And that hurt the
confidence of our economy. By the way, they will pay a price for not
telling the truth. (Applause.)

But we needed more action, so I went in front of the Congress this
year and I said, let's come together, let's set aside all the party
politics and partisan bickering and remember why we're in Washington in
the first place -- we're there to do what's right for the American
people. We must care about how to help somebody find work. That's
what we ought to be focused on, not partisanship, but what's right for
the American people.

And, thankfully, enough of us got together and passed a tax relief
plan that will allow the American people to have more money in their
pocket, that will encourage businesses to make more investment. And
that says to investors, we want you to invest more. The tax relief
proposal was based on a simple principle. It starts with, the money we
spend in Washington is not the government's money, it's the people's
money. (Applause.)

And when you've got additional money in your pocket, you're going
to demand a good or a service. And when you demand a good or a
service, in this economy, somebody is going to meet that demand.
Somebody will produce the good or a service. And when that happens,
somebody is more likely to find work. That's the basis of the tax
relief plan, the jobs and growth package that I proposed and that was
passed.

And here's what was accomplished. We've lowered taxes all across
the board, so that people have more take-home pay. And that's
important, not only for the individual consumer and the taxpayer, but
that's equally important for small businesses. And the reason it's
important for small business is, most small businesses are Subchapter S
or sole proprietorships, which means they pay taxes at the individual
level. So when you hear the -- hear me talk about reducing individual
tax rates, the American people have got to understand, that means
capital infusion into the small businesses of America, which means
somebody is more likely to find work when small businesses have more
money to invest and more money to spend. (Applause.)

The Child Tax Credit has been expanded from $1,000 -- to $1,000
from $600, and the $400 differential will be in the mail by July.
(Applause.) I was going to say, check's in the mail. (Laughter.)
Better be in the mail. (Laughter.) Somebody might be looking for work
in Washington. (Laughter and applause.)

We reduced the marriage penalty, which helps a million New Jersey
couples. (Applause.) We have cut the top rate of taxes of dividends
and capital gains to 15 percent. Small businesses under the bill that
I signed can deduct up to $100,000 -- up from $25,000 -- in new
equipment from their taxes. (Applause.)

And if they invest more than $100,000, they qualify for a 50
percent bonus depreciation that further reduces the cost of
investment. These are important incentives for economic vitality and
growth. These are so important that people like Andrea Foods is now
contemplating new capital investment. They're contemplating buying new
machines that will make their business more productive. Productivity
is an important part of any small business. It enables you to better
compete. It means it's more likely you'll have a stable work force.
It means you can get a better return on dollars spent.

These good folks at Andrea make 1,200 pounds of pasta every
minute. I saw a lot of calories grinding through. (Laughter.) Yet,
Rose Marie and Michael are not satisfied with the production level of
their company. They want to expand. They want to make more jobs
available in the neighborhood in which they work. They want to be able
to compete better. And so they're now contemplating a new -- buying a
new pasta cooker and a new flash freezer, which will expand their
production by 50 percent. They took a look at the tax relief plan,
they calculated the benefits. They said, it makes sense for us to buy
new machinery so that we can expand.

And that's really important. It's not only important for their
business. It's likely that if this -- if all goes well, they'll add 20
more employees. But it's pretty darn important for the person who's
going to manufacture their machine and sell it to them. In other
words, their decision has more to -- has much more to do than just
inside their own business. Their decision affects other people, as
well. And that's why this part of the law is so important.

And so when Michael turns around and orders a pasta cooker, he may
talk to John, at MBC Food and Machinery in Hackensack, New Jersey.
After all, they've been doing business with each other for quite a
while. At least their dads have been doing business with each other
for quite a while. They've had a history of working together.

But John has seven employees busy on the -- would keep seven more
employees busy if this machine order comes in. And he's excited about
it, obviously. He's hoping Michael makes the right decision.
(Laughter.) Maybe we can arrange a contract right here. (Laughter.)

But it all happened as a result for Congress coming together and
asking the fundamental question: how do we get this economy going
again, what can we do that's wise enough to encourage investment,
particularly at the small business level? The ability to expense
capital dollars more quickly for small business and in greater amounts
for small businesses is an incredibly important part of economic growth
because small businesses provide most of the new jobs created in
America. (Applause.)

That was the common story I heard this morning by the small
business owners -- we intend to take advantage of the smart things you
did in the tax code in order to increase employment and to make sure
our businesses are more productive.

We've also got other problems that we need to deal with here in
America to make sure our small businesses grow. One of those problems
is too many lawsuits, people are getting sued too often. (Applause.)
We've had some abuse in the class action lawsuits, which make life more
expensive here in America. And I appreciate very much the House of
Representatives dealing with this issue. And I strongly support the
measures they took, the reform on class action, which makes the --
easier for class action suits to end up in federal court. This has got
better restraint on the excesses that sometimes take place as a result
of class action lawsuits.

In other words, in order -- if you get into federal court it makes
it easier to stop lawyers from shopping around the country looking for
a favorable court. Because generally what happens is in a class action
suit the people who are suing get very little, and the lawyers filing
the suit get a whole lot. And that doesn't seem fair to the Congress
and it doesn't seem fair to me, and the Senate needs to act.
(Applause.)

I'm concerned and mindful about what paperwork and regulations do
to small businesses. (Applause.) So I put out an executive order that
requires all federal regulatory agencies to minimize the burden on our
small businesses. And I expect Hector to make sure that the burden is
minimized on the small businesses. We've got an issue e-mailing --
(applause.)

I'm concerned about the fact that we don't have a national energy
policy. You know, this country has made a wise decision to protect our
air and water, and that's good. In order to protect our air, many of
the power plants have switched to natural gas. Natural gas is a
clean-burning fuel.

The problem is, we don't have a policy that encourages the
exploration for natural gas, so demand is going up for natural gas and
supply isn't. And that's why you're seeing the price rise. We need
common sense energy policy in America. We need an energy policy that
makes us less dependent on foreign sources of energy, and we need an
energy policy -- (applause) -- and we need an energy policy that uses
our technologies in such a way that we can explore, in environmentally
safe ways, for additional supplies of natural gas. When demand for a
product goes up and supply doesn't follow that demand, prices will
rise.

The Congress must act. I have proposed common sense, reasonable
energy policy for America. The House has passed a bill. The Senate is
debating the bill. For the sake of American consumers and small
businesses, we need a national energy policy. (Applause.)

I understand the cost of health insurance to small businesses. I
understand the need for us to put good policy in place that doesn't
nationalize health care, that doesn't make the federal government the
end all for health care, but a policy that addresses concerns. For
example, health clinics for the poor all across America are necessary
to take the strain off of small businesses, as well as community
hospitals. We need to have associate health care plans to allow small
businesses to come together and pool risks, which will take the
pressure of rising premiums.

We need to help our docs. If one of the things we need is
affordable and accessible health care, it makes sense to push for
medical liability reform. We got too many junk lawsuits that cause
docs -- (applause). In a litigious society, particularly for doctors,
doctors and hospitals will practice what's called preventative
medicine. They will do tests -- ask for tests, perform tests, just to
protect themselves in a court of law. And that's expensive. And that
becomes expensive for consumers. And then, of course, these lawsuits
will cause doctors' premiums to go up. And that causes the consumers
to have to pay more. Or in some cases, it causes doctors not to
practice medicine. It drives them out of business. If you're
interested in having a health care system that is -- provides
affordable and accessible health care, you ought to join the efforts to
have medical liability reform.

Now, when I came to Washington, D.C., I took a look at the issue
and I said, well -- you know, having been a governor, I said, well,
maybe these issues ought to be solved at the state level. Then I
looked at the impact on our budgets. Preventative medicine and the
high cost of litigation drives up the cost of Medicaid, drives up the
cost of Medicare, drives up the cost of providing veterans with health
care.

I've come to the conclusion that all these lawsuits are a national
issue and therefore require a national solution, and have sent up an
idea to the United States Congress that says, people ought to have
their day in court, bad docs certainly ought to be punished, people
ought to recover economic damages -- but there ought to be a hard cap
on non-economic damages, and there ought to be a reasonable cap on
punitive damages. In order to be able to get a handle on the cost --
rising cost of health care, we ought to let our docs practice medicine
without fear of a junk and frivolous lawsuit. (Applause.)

Finally, when I get back to Washington here in an hour, I'm going
to start, again, working on the Medicare reform package. I believe
that this nation can set aside the old-style politics and come together
and make sure our seniors have got a health care system that is modern,
that includes prescription drugs and that allows our seniors the same
opportunity that federal employees have, which is the ability to choose
a plan that best meets their needs.

Listen, if choice in health care is good enough for members of the
United States Congress and their employees, it ought to be good enough
for the seniors of the United States of America. (Applause.)

We've got issues, but we're going to deal with them. We've got
challenges, but there's no doubt in my mind we can overcome them.
There's been a lot of talk around the world about the muscle of the
United States of America, and we're pretty strong. (Applause.)

But our military muscle is not the true strength of America. I
mean, there's no question about it, we've got the capacity to fight and
win war and therefore make the world more peaceful. There's no
question about it, because of our technologies and the skill and
bravery of our troops, we can now target the guilty and protect the
innocent. (Applause.)

But those who focused only on that don't really understand
America. The strength of America is the heart of the American people.
The strength of this country is the great compassion of the people who
live here. Today, when I got off the Air Force One, I met Marisa
Fontainhas. You probably never heard of Marisa. She is a graduate of
New Jersey Institute of Technology. But the reason I bring her up is
because she volunteered at the St. John's Soup Kitchen. She decided
that a patriotic American is somebody who does more than just put their
hand over their heart and pay taxes -- hopefully less taxes now --
(laughter) -- but somebody who is willing to serve something greater
than themselves.

At the same time, Scott Stevens was there. You probably heard of
old Scott. He just happened to win the Stanley Cup. (Applause.) The
reason the two go together is because Marisa was recognized by the New
Jersey Devils Foundation for her desire to make a difference in
somebody's life and, therefore, was awarded a college scholarship.
Marisa, thank you for coming. I'm glad you're here. (Applause.)

But Scott volunteers, as well. He's knocking heads on the ice, and
then he's trying to save lives off the ice. (Laughter.) He volunteers
at the School Assembly Program. In other words, he's using his
position to make a difference in somebody's life.

There are people who hurt in America, people who wonder whether or
not the American Dream is meant for them, people who hear the word
entrepreneurship and not sure what the heck that means. Our attitude
-- or my attitude is, so long as one of us hurt, we all hurt. And,
therefore, we have a responsibility as Americans to put our arms around
somebody who hurts. And each of us can make a difference. The true
strength of this country is the fact that there are millions of Marisas
all across America, who without a government law or without the
President picking up the phone and saying, would you help somebody in
need, are doing it on their own. And as a result, this society is and
can and will continue to change, one heart, one soul, one conscience at
a time -- So that the bright lights of hope of this great country will
be able to shine in every neighborhood, in every part of our land.

No, listen, we're tough, which will make the world a more peaceful
place and a more free place. But the true strength of the country, the
true strength of America happens when a neighbor loves a neighbor just
like they'd like to be loved themselves, and it happens every day in
America. (Applause.)

Thank you all for coming. May God bless you, and may God continue
to bless America. (Applause.)